WHEAT INDUSTRY.

Auckland Star, Volume LXI, Issue 227, 25 September 1930, Page 11

WHEAT INDUSTRY.

HISTORY IN NEW ZEALAND.

EXPORTING TO IMPORTING.

STABILISING THE MARKET.

(By W. S. HILL, Ph.D.) No. 1. The recent world-wide slump in prices of wheat, due principally to bounteous harvests in the larger wheat-growing countries, has focused public attention on the position of the wheat industry in New Zealand, where the industry is protected by a sliding scale of duties. The area under wheat this season will be between 280,000 and 300,000 acres. As a crop, wheat usually takes its place in a four-course rotation system, so that the area used for wheat farming approximates 1,000,000 acres. This represents potential wheat land and plant to the value of about £30,000,000, of which from one quarter to one third is used annually. With decreased returns from sheep products there is a tendency to increase the area sown to wheat. In addition, the flour mills, implement manufacturers, fertiliser works, rope and twine works and a portion of our railway system all have a large amount of capital invested in integral parts of the wheat industry. The total estimated amount paid in wages and railage to main ports in the wheat-growing areas approximates £900,000 per annum. That the prosperity of a large section of the population of the South Island is dependent on the stability of the wheat industry is thus evident. Export Years. From the years 1869 to 1914 there was a considerable export trade in New Zealand grown wheat. In one year (1883) the export was nearly 5.000.000 bushels, while during some of the bad seasons small importations were made, so that while the crop in New Zealand is subject to seasonal variations it is much less affected by such than is the crop in Australia, where the variation in production due to seasonal causes is much greater. From 1914 to 1926 the. fluctuations in production of wheat and in the exports and imports were greater than in past decades, and in the later war years imports steadily increased. The large harvest of 1922, which yielded 10,565,275 bushels, resulted in a surplus of over a million bushels for export. The harvest of 1924 yielded only 4,174,537 bushels, and necessitated importing 3,548,340 bushels, costing £1,039,774. This rapid j decrease was due not only to the lower yield per acre, but also to the greatly reduced area sown. The area in 1922 was 352,918 acres, while that in 1924 was only 173,864 acres. This reduction in area continued until 1926, when 151,673 acres were sown, and to make up the deficiency the Dominion was still dependent on overseas supplies and prices, so that imports in 1926 cost £1,070,874. From 1924 to 1925 the Government made arrangements for the forward purchase of Australian wheat, and this action was estimated to have saved the bread consumers and poultry farmers in New Zealand at least £35,000 per month during the latter part of 1924* and early 1925, as the f.o.b. overseas prices advanced to 7/3 per bushel. It was thus evident that violent fluctuations in prices of wheat were not only forcing farmers out of wheat-growing, but were a menace to the bread consumers and poultry farmers of the Dominion. "A Fair Price." In 1925 a representative conference of all interests submitted the following resolution to the. Government: —"That in order to overcome the present deadlock in the wheat situation and secure for the New Zeala'nd wheat-grower a fair price for his produce, and to ensure a continuance of wheat-growing on a scale sufficient for the Dominion's growing requirements, this conference requests that the Government should either reimpose the embargo on flour or j levy a dumpi'ng duty on any further i importations." As a result Cabinet agreed that millers' offer farmers an increase of 5d per bushel for wheat, and that duty on bran and pollard from Australia be reducer]. The difficulty was solved without a corresponding increase in the price of flour. In 1926 the Government agreed to a "free market wit/: duties."' The present positio'n is that the duty on wheat depends upon the current domestic value at the port of export to New Zealand, and the value of 5/6 per bushel is taken as the basis. If the value is 5/6 per bushel the duty is 1/3 per bushel, and the wheat rises and falls by |d per ■bushel for every 3d by which the value falls or rises. Position Stabilised. As a result the price of bread has not fluctuated; the area in wheat has steadily increased from 1926 onwards, and the position is stabilised. The expected yield for 1930 is estimated as 7.307,47S bushels, as compared with 8,832,864 bushels threshed in 1929. The wheat on hand on February 28, 1930, was 1,682,107 bushels, and the expected imports 726,000 bushels. Thus the total available wheat for 1930 is estimated as 9,715,555 bushels. Taking the require, ments for 1930 as 9,000,000 bushels, the carry-over ehould be about 715,000 bushels, which is normal. Thus we have a stabilised .position, with sufficient wheat produced for our requirements. Any sudden great importation or alteration in the present duties would drive farmers out of wheatgrowing, and again place New Zeala'nd in the position of being dependent on overseas supplies and prices.